FINRA

SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER, FINRA RULE 2010, NASD RULES 2110, 2120, 2210(B), 2210(D)(1)(A), 2210(D)(1)(B), 3110, INTERPRETATIVE MATERIAL 2310-2: ELVERUD APPROVED AND CAUSED HIS MEMBER FIRM TO CIRCULATE A NEWSLETTER RELATING TO A COMPANY WHOSE SECURITIES HIS FIRM MARKETED, WHICH COMPARED STATISTICS FROM THE PERIOD IMMEDIATELY PRIOR TO DISTRIBUTION OF THE NEWSLETTER TO STATISTICS FROM SIMILAR PERIODS A YEAR BEFORE, GENERALLY INDICATING THAT THE COMPANY'S PERFORMANCE HAD IMPROVED. THE NEWSLETTER FAILED TO DISCLOSE MATERIAL FACTS AND INFORMATION CONCERNING THE COMPANY'S FINANCIAL DIFFICULTIES, WHICH WERE NECESSARY TO GIVE A BALANCED PICTURE FOR INVESTORS AND IT PRESENTED INSUFFICIENT RISK DISCLOSURES ABOUT RECENT EVENTS AT THE COMPANY. THE NEWSLETTER'S TREATMENT OF THE COMPANY'S FINANCIAL STATE AND PROSPECTS WAS UNDULY AND EXCESSIVELY POSITIVE AND WAS DISTRIBUTED TO APPROXIMATELY 8,000 INVESTORS TOTAL. ELVERUD DISTRIBUTED MISLEADING LETTERS WHICH CONTAINED UNTRUE STATEMENTS OF MATERIAL FACT AND OMITTED TO STATE NECESSARY MATERIAL FACTS TO CUSTOMERS FALSELY ASSERTING "NEW RENEWAL OPTIONS" FOR NOTES ISSUED BY THE COMPANY WHEN IN FACT THE COMPANY FOUND THAT IT HAD INSUFFICIENT FUNDS AVAILABLE TO REDEEM NOTES PRESENTED BY INVESTORS. ELVERUD KNEW AT THE TIME THAT HE WROTE AND SENT THE LETTERS THAT NO SUCH RENEWAL OPTION HAD BEEN ANNOUNCED OR OFFERED TO OTHER INVESTORS AND KNEW THAT THE COMPANY WAS EXPERIENCING FINANCIAL DIFFICULTIES. MOREOVER, THE LETTERS OMITTED ALL REFERENCE TO THE FINANCIAL DIFFICULTIES THAT THE COMPANY WAS EXPERIENCING, INCLUDING BUT NOT LIMITED TO AN INABILITY TO MEET OBLIGATIONS AS THEY CAME DUE. ELVERUD CAUSED HIS FIRM TO ADVERTISE RENEWABLE NOTES ON THE INTERNET, USING INTERNET ADS AND MAINTAINING WEBSITES FOR ITS ISSUERS' NOTE OFFERINGS. THESE ADVERTISEMENTS OMITTED MATERIAL INFORMATION, WERE NOT FAIR AND BALANCED, AND FAILED TO PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS WITH REGARD TO THE NOTES. IN ADDITION, ELVERUD CREATED, APPROVED, AND CAUSED THE DISTRIBUTION OF SALES KITS, PRINT ADVERTISEMENTS, MAILERS, FORM LETTERS, AND NEWSLETTERS THAT OMITTED MATERIAL INFORMATION AND PRESENTED THE INFORMATION IN A WAY THAT WAS NOT FAIR AND BALANCED, WHICH RESULTED IN ELVERUD DISTRIBUTING COMMUNICATIONS THAT FAILED TO PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS REGARDING THE NOTES. ALSO, BY CREATING, APPROVING, AND CAUSING THE DISTRIBUTION OF NEWSLETTERS, ELVERUD CONVEYED AN UNWARRANTED IMPRESSION OF SAFETY. ELVERUD FAILED TO HAVE PUBLIC COMMUNICATIONS, INCLUDING ADVERTISEMENTS, OF THE FIRM APPROVED BY SIGNATURE OR INITIAL BY A REGISTERED PRINCIPAL OF THE FIRM, AND FAILED TO MAINTAIN RECORDS OF PUBLIC COMMUNICATIONS. ELVERUD DID NOT MAINTAIN A SEPARATE FILE CONTAINING ALL SUCCESSIVE VERSIONS OF SALES KITS AND DID NOT MAINTAIN A FIRM RECORD OF THE APPROVAL AND USE OF INTERNET ADVERTISEMENTS. AS THE FIRM'S PRESIDENT AND CHIEF COMPLIANCE OFFICER (CCO), AND AS THE INDIVIDUAL WHO CREATED, APPROVED AND MAINTAINED RECORDS REGARDING THESE ADVERTISEMENTS, ELVERUD WAS RESPONSIBLE FOR THEIR ACCURACY. THE FIRM'S SCHEDULE OF DESIGNATED PRINCIPAL RESPONSIBILITIES WAS INACCURATE IN THAT IT IDENTIFIED THE FIRM'S SECOND PRINCIPAL AS RESPONSIBLE FOR "ADVERTISING REVIEW AND APPROVAL" AND FOR "ANNUAL REVIEW OF OVERALL SUPERVISORY SYSTEM OF BROKER-DEALER." IN FACT, THESE SUPERVISORY FUNCTIONS WERE CARRIED OUT BY ELVERUD. IN ADDITION, FORM BD FILINGS MADE BY OR FOR ELVERUD, ON BEHALF OF THE FIRM, WERE FALSE OR INACCURATE; THE FILINGS LISTED A DIFFERENT INDIVIDUAL AS THE CCO OF THE FIRM, WHEN IN FACT THAT TITLE OR RESPONSIBILITIES OF CCO WERE HELD BY ELVERUD. ELVERUD CAUSE THE FIRM'S BOOKS AND RECORDS RELATING TO THE IDENTIFICATION OF PERSONNEL HOLDING SUPERVISION AND COMPLIANCE RESPONSIBILITIES TO BE INACCURATE. FINALLY, ELVERUD'S INACCURATE CALCULATION OF NET CAPITAL CAUSED THE FIRM TO MAINTAIN INADEQUATE NET CAPITAL UNDER SEC RULE 15C3-1 WHILE IT CONDUCTED A SECURITIES BUSINESS.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

Indefinite

12/9/2010

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, ELVERUD CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. FOR SETTLEMENT PURPOSES, THE CHARGES OF VIOLATING SECTION 10B OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER, NASD RULE 2120, AND INTERPRETATIVE MATERIAL-2310-2 HAVE BEEN OMITTED FROM THE FINDINGS.

ILLINOIS

RESPONDENTS REGISTRATION AS A SALESPERSON IN THE STATE OF ILLINOIS IS SUBJECT TO REVOCATION PURSUANT TO SECTION 8.E(1)(J) OF THE ILLINOIS SECURITIES LAW.

Consent

DISMISSAL

THE RESPONDENT WILL NOT ACT AS A DESIGNATED PRINCIPAL IN THE STATE OF ILLINOIS FOR A PERIOD OF FIVE YEARS. THE RESPONDENT WILL PAY FOR THE COST OF THE INVESTIGATION.

NOTICE OF HEARING WAS DISMISSED PER CONSENT ORDER OF DISMISSAL ISSUED.

NASD

NASD CONDUCT RULES 2110, 2210, 2210(D)(1)(A), 2310, 2710(B)(6)(A)(VI), 2710(C)(2)(C), 2710(C)(1), 3010(A), 3010(B) AND SECTION 17(B) OF THE SECURITIES ACT OF 1933 - RESPONDENT ELVERUD, THROUGH MEMBER FIRM, MADE UNSUITABLE RECOMMENDATIONS TO PUBLIC CUSTOMERS IN CONNECTION WITH SECURITIES OFFERINGS. THE RESPONDENT RECOMMENDED SECURITIES BASED SOLELY ON WRITTEN MATERIALS SUBMITTED BY POTENTIAL CUSTOMERS THAT DID NOT CONTAIN SUFFICIENT INFORMATION TO FORM A REASONABLE BASIS FOR BELIEVING THAT THE INVESTMENT WAS SUITABLE FOR THOSE CUSTOMERS. THE RESPONDENT ALSO FAILED TO DISCLOSE TO NASD COMPENSATION RECEIVED BY THE FIRM, AND FAILED TO DESCRIBE FIRM'S ADVERTISING COMPENSATION IN OFFERING MATERIALS DISTRIBUTED TO THE INVESTING PUBLIC, AND RECEIVED UNFAIR AND UNREASONABLE COMPENSATION IN CONNECTION WITH THE OFFERING. THE RESPONDENT, THROUGH THE FIRM, FURTHER FAILED TO PROVIDE SUFFICIENT RISK DISCLOSURES IN THE ADVERTISING MATERIALS REGARDING RECENT EVENTS. THE FIRM'S ADVERTISING REVENUE WAS ALSO NOT DISCLOSED IN THE OFFERING MATERIALS DISTRIBUTED TO THE INVESTING PUBLIC. FINALLY, THE FIRM MAINTAINED AN INADEQUATE SUPERVISORY SYSTEM THAT FAILED TO PREVENT AND DETECT THE SUITABILITY VIOLATIONS AND FAILED TO ESTABLISH AND MAINTAIN ADEQUATE WRITTEN SUPERVISORY PROCEDURES, AND THROUGH RESPONDENT ELVERUD FAILED TO SUPERVISE SUITABILITY DETERMINATIONS.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$60,000.00

Suspension

RE-QUALIFY

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT ELVERUD CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS FINED $60,000, JOINTLY AND SEVERALLY, SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER FIRM IN ALL CAPACITIES FOR TWENTY (20) DAYS. UPON COMPLETION OF THE SUSPENSION IN ALL CAPACITIES, A SUSPENSION FROM ACTING IN ANY SUPERVISORY CAPACITY OR AS TRAINER OF PERSONNEL WITH ANY NASD MEMBER FIRM FOR A PERIOD OF NINE (9) MONTHS. NOTWITHSTANDING THIS SUPERVISORY SUSPENSION, ELVERUD SHALL BE PERMITTED TO MAINTAIN HIS REGISTRATION AS A PRINCIPAL, AND MAY PERFORM ANY NON-SUPERVISORY AND NON-TRADING TASK DESCRIBED IN NASD MEMBERSHIP AND REGISTRATION RULE 1021(B) RELATING TO THE MANAGEMENT OF THE MEMBER FIRM'S INVESTMENT BANKING AND SECURITIES BUSINESS, INCLUDING SOLICITATION OF NEW BUSINESS ON BEHALF OF THE FIRM; AND ORDERED TO RE-QUALIFY BY EXAMINATION AS A SERIES 24 PRINCIPAL BEFORE THE COMPLETION OF THE 9-MONTH SUPERVISORY SUSPENSION DESCRIBED ABOVE. UPON COMPLETION OF THE NINE-MONTH SUPERVISORY SUSPENSION, ELVERUD HAS NOT RE-QUALIFIED BY EXAMINATION AS A SERIES 24 PRINCIPAL, ELVERUD SHALL BE PROHIBITED FROM SERVING IN ANY PRINCIPAL CAPACITY UNLESS AND UNTIL HE HAS SUCCESSFULLY RE-QUALIFIED BY EXAMINATION AS A SERIES 24 PRINCIPAL. THE SUSPENSION IN A SUPERVISORY CAPACITY EFFECTIVE NOVEMBER 22, 2004, AND WILL CONCLUDE ON AUGUST 23, 2005. THE SUSPENSION IN ALL CAPACITIES EFFECTIVE NOVEMBER 1, 2004 TO NOVEMBER 20, 2004.

NASD ENFORCEMENT DEPT. AWC CAF040069. NASD ENFORCEMENT DEPT. AWC CAF040069. 25% OF THE JOINT AND SEVERAL FINE, $15,000 WAS SENT ON 9/27/04 ALONG WITH A CHECK FROM BILL CASEY FOR $5,000. THE OTHER 75% WILL BE PAID OVER 3 INSTALLMENTS, ONE EACH QUARTER. TENTATIVE DATES FOR MR. CASEYS SUSPENSION IS 10/4/04 AND FOR ED ELVERUD 11/1/04.